Exhibit 1
PROMISSORY NOTE
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$2,177,356.00 Oklahoma City, Oklahoma September 30, 2005
FOR VALUE RECEIVED, Xxxxx X. Xxxx and Xxxxxxx Xxxx ("Borrower"), jointly
and severally, promise to pay to the order of Xxxxxxx X. Xxxx, or his successors
or assigns ("Lender"), the principal sum of Two Million One Hundred
Seventy-seven Thousand, Three Hundred Fifty-six DOLLARS ($2,177,356.00) together
with interest thereon at the rate of six percent (6%) per annum.
Xxxxxx is acting as nominee and agent for the following principals:
Xxxxxxx X. Xxxx, Xxxxxx X. Xxxx, Bonanza Energy Corporation of Kansas, Lamb
Family Limited Partnership, and Crown Properties, LC.
The entire principal balance and any unpaid interest under this note shall
be payable upon the earlier of the following maturity dates: (a) an Event of
Default as defined in the Pledge Agreement between Borrower and Lender; or (b)
on September 30, 2006.
The obligations under this note shall be secured by all of Borrower's
2,121,146 shares of Quest Resource Corporation (evidenced by certificate #8775)
as provided in the Pledge Agreement between Borrower and Lender.
If the principal and interest is not paid when due, then the holder of
this Note shall have the right and option to declare, without notice to
Borrower, that the unpaid balance of principal and accrued interest on this Note
is due and payable, and to foreclosure or require foreclosure of any and all
collateral securing payment hereof, and to exercise any and all of the rights
and remedies the holder may have under the Kansas uniform commercial code or any
other instrument. Failure to exercise this option upon failure to make such
payment shall not constitute a waiver of the right to exercise it at any future
date.
All amounts paid hereunder shall be applied first to all interest then
accrued and unpaid hereunder, and the balance, if any, to principal. All past
due principal and interest on this Note shall bear interest at 15% per annum
from maturity until paid. All sums called for, payable, or to be paid hereunder
shall be paid in lawful money of the United States of America which at the time
of payment is legal tender for the payment of public and private debts therein.
If default is made in the payment of this Note at maturity (regardless of
how its maturity may be brought about) or the same is placed in the hands of an
attorney for collection, or if suit is filed hereon, or proceedings are had in
bankruptcy, probate, receivership, reorganization, or other judicial proceedings
for the establishment of collection of any amount called for hereunder, or any
amount payable or to be payable hereunder is collected through any such
proceedings, Borrower agrees to pay the holder of this Note a reasonable amount
as attorney's and/or collection fees and expenses.
The obligations of each Borrower shall be joint and several.
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Borrower hereby waives presentment and demand for payment, notice of
intent to accelerate maturity, notice of acceleration of maturity, protest or
notice of protest and non-payment, bringing of suit and diligence in taking any
action to collect any sums owing hereunder and in proceeding against any rights
and properties at any time securing payment hereof, and agrees that its
liability on this Note shall not be affected by any release of or change in any
security for the payment of this Note.
This note shall be governed by the laws of the State of Kansas. The
undersigned shall be jointly and severally liable for the obligations under this
note.
EXECUTED as of the date and year first above written.
BORROWER
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
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